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New Member
Marie
Posts: 7
Registered: ‎04-05-2007
0

Effect of not paying credit card item disputed based on quality of services?

I just pulled my FICO score based on Equifax - it is 776.
 
I have a $2,500 charge that I disputed with a credit card based on the quality of goods or services, as the so-called investor education did not have the promised benefits.  The credit card company apparently was sloppy in its processing, because it wound up making entries on my account that had the effect of giving the money back to me, and I asked for a refund check, which they sent me.  At the same time, they re-charged a related $995 dispute.  Based on advice from an attorney, I wrote a letter appealing the denial of the $995 dispute, and asking the status of both the disputes I had filed.  The credit card company's response was to re-charge the $2,500 more than a month after the original entries.
 
I read that you "may" not have to pay back charges that you are disputing on the basis of quality of goods or services, and am thinking about not paying the $2,500 back to the credit card company.
 
I called another credit card company with which I have a 0% interest account (which expires in September 2007), and they said that they would not raise the 0% rate if I had a consumer statement on my credit bureau reports.
 
I am concerned about what not paying this disputed amount may do to my FICO score.  I used the FICO Score Simulator, selecting the "miss a payment" items, and the estimated score went to a range of 656 to 706.  However, I don't know what having $2,500 reported as a charge-off or in collections would do to the FICO score.
 
I have a home equity line of credit that I will have to refinance in two or three years, so I need to be sure I can still get credit.
 
Does anyone know how bad a charge-off or collections item will affect an otherwise excellent FICO score, if there are no other negative items on the credit report?
 
Thanks!
Regular Contributor
okrogius
Posts: 169
Registered: ‎03-16-2007
0

You don't want the chargeoff, not worth it. Score wise th...

You don't want the chargeoff, not worth it. Score wise this would drop your score anywhere from 500s to maybe 600s at best.
New Member
Marie
Posts: 7
Registered: ‎04-05-2007
0

Even if I have a consumer statement on the file?

Would it drop this much even if I have a consumer statement about the credit card dispute on the credit report?
Regular Contributor
okrogius
Posts: 169
Registered: ‎03-16-2007
0

A statement is absolutely irrelevant to your score. If yo...

A statement is absolutely irrelevant to your score. If you wish to dispute a charge, do so within the appropriate means, not by defaulting on your agreement.
New Member
Marie
Posts: 7
Registered: ‎04-05-2007
0

I did do the dispute within the normal procedures - but t...

I did do the dispute within the normal procedures - but the credit card company appears to have been very sloppy processing it, first returning the money to me, then taking it back more than a month later.  When the credit card company sent the information the merchant had submitted, it appears that they gave no weight to the evidence I sent showing the lack of quality, only to the signed order the merchant submitted. 
 
It's really hard to find consumer information that goes beyond the point of saying "you MAY not have to pay for defective merchandise or services."  If not paying for defective merchandise or services depends on the credit card company, it appears they are not going to make any determination on the basis of the dispute, that the services did not provide the benefits promised, but treat the dispute as if it were based on not authorizing the charge, where the only thing the merchant has to do is show a signed order.
 
That seems to violate the spirit of the law, and still leaves the ripped-off consumer having to sue on their own.
 
It's also really hard to find an attorney who has enough experience in consumer complaints to help - obviously, the first attorney I consulted had no idea what to do, because I think if I hadn't asked for the status of both disputes, I would still have the $2,500.
Regular Contributor
okrogius
Posts: 169
Registered: ‎03-16-2007
0

It's standard procedure to credit the customer when the c...

It's standard procedure to credit the customer when the customer disputes an item. It's then up to the merchant to provide proof to win the chargeback (in which case the money is then again charged to the customer).
 
See https://direct.53.com/help/53direct/Visa%20Chargeback%20Reason%20Codes.htm or https://direct.53.com/help/53direct/mcdchargebackcodes.htm for an idea of what sort of evidence is required for each particular chargeback claim. Note that the burden of proof is on the merchant.
 
If you feel the merchant hasn't provided the required proof for them, contact yoru card issuer again. A lawyer may be useful. If that doesn't work, your likely recourse is a lawsuit (or more likely an arbitration, depending upon your agreement).
Valued Contributor
jaybee
Posts: 1,088
Registered: ‎03-18-2007
0

In the long run you will be losing way more than $2500. 1...

In the long run you will be losing way more than $2500.
1. With your score now you can pretty much get approved for anything.
2. If you were to try and make a purchase, like a home, most lenders would want you to pay that off.  When you do pay it off your score will not increase. You would also have to fight with the CA for pay for deletes, junk collectors etc.... The negatives are endless.
3. Most importantly once you get into the mid 600's your interest rates will be much more than you pay now.
4. You will be on this forum a year from now asking how can I get my score to the 700's.
 
I have been there before and it is taking me forever to get my mid score to 700 and I definitely regret it, it is not worth it in the long run.Do want you can to dispute the item with the CC, do not take no for an answer and stand your ground.  
Oh yeah and that is probably your high score think of the damage it will do to the other scores that are possibly lower.
If at first you don't succeed... hang up and try again!!
New Contributor
yoreljm
Posts: 82
Registered: ‎03-31-2007
0

A charge off will toment you for many a years.

A charge off will toment you for many a years.
New Member
credit12
Posts: 9
Registered: ‎04-08-2007
0

CREDIT

Well credit is your friend I love credit I have Renntech E-55 Amg Mercedes 200K , Million dollar plus homes in florida on the beach , you name it and it would not be possible if it was not for credit SCHOOL TEACHES NOTHING ABOUT THE REAL WORLD. IF I WERE YOU PAY YOU BILLS.I USED TO KNOW OF A PERSON NAMED YOUR SCREEN NAME I'M JUST THINKING THAT HOW YOU WRITE SEEMS LIKE HER. ANYWAY CREDIT HAS MADE ME MILLIONS ALWAYS PAY YOUR BILLS AND KEEP YOUR CREDIT LINES IN CHECK AND YOU WILL BE FINE . SURGEONS PAY ME $2000/HR TO ADVISE THEM ON CREDIT I HELP OUT PEOPLE FOR FREE THAT NEED HELP.
ONE OF MY ASSISTANTS HAS A MBA FROM YALE AND AFTER 2/1-2 YEARS WORKING FOR ME SHE IS FINALLY LEARNING ENOUGH TO WHERE SHE CAN RUN THE FLORIDA REGION.
ONE THING THOUGH IS THAT MONEY DOES NOT BUY HAPPINESS. AND MARIE THE ONE I USE TO KNOW. GOT MARRIED AND HAD A BABY. I SCREWED UP AND IT TOOK TILL I WAS 26 BEFORE I BECAME WISE ENOUGH TO USE MY KNOWLEDGE IN HELPING OTHERS. (HER MOTHER CLEANED MY MOUTH AT THE DENTIST ONE DAY)
New Member
Marie
Posts: 7
Registered: ‎04-05-2007
0

Thanks to everyone for the advice - it has been paid, but VERY RELUCTANTLY!

Thanks, okrogius for the site showing proof needed for different types of disputes.  That was what I was wanting to see, but my dispute was with Discover – do you have their rules, also?

The instructions for Mastercard say that the merchant needs to show only

 

"A detailed written rebuttal addressing the cardholder's claim (point by point) and any supporting documentation to prove the case. Rebuttal must address what steps the merchant took to resolve the complaint before it became a chargeback."

 

for a dispute based on

 

"Cardholder Dispute-Defective/Not as Described

 A cardholder returned (or attempted to return) goods or services to a card acceptor for any of the following reasons:

·           Goods and services did not conform to their description (quality, workmanship, color, size, or quantity is not as described)

·           Goods arrived broken or could not be used for the intended purpose "

 

The merchant's reply, which Discover sent to me when I requested the status of the two disputes, was a lie for one dispute for $995, because they said I did not contact them prior to the dispute, when I had called and gotten voice mail at least seven times.  The rest seemed to be "well, we're a reputable firm" kind of stuff.

 

This is what I've learned from this experience:

 

Credit card dispute lessons:

1) Always file the dispute by mail (certified mail, return receipt requested), at least when it involves the quality of goods or services. 

2) Include a copy of the contract, and in your letter, specifically address how the merchant did not live up to the terms of the contract.

3) Keep a log of the phone calls you make, and send a copy of it with the dispute.

4) Write a letter to the merchant specifying why you are dissatisfied and send it by certified mail, return receipt requested.  (Do this before you file the dispute, but if you are almost at the 60 day limit for filing the dispute, do it fast!)

5)  Send a copy of the letter you wrote to the merchant with the credit card dispute

6) Don’t wait on the merchant to respond before you file the dispute – all they  have to do is keep you waiting until your 60 days are up, and they’ve won!

7)  If you unexplainably get what looks like you’ve won a big credit card dispute amount – DON’T BRING IT TO THE CREDIT CARD COMPANY’S ATTENTION!  Just let it ride, get your refund, close the account, and go on with your life!

 

Purchasing lessons:

1) INVESTools cannot teach you to trade (imho), although they are VERY good at motivating you to take their exorbitantly priced courses,

2) Some merchants structure their sales so that they can work the system to keep you from getting a refund for services that do not work,

3) No matter what the consumer protection laws are in your state, they are not likely to protect you without a LARGE additional investment on your part.

 

Okrogius, I understand that the credit card company normally issues a credit to your account when you dispute an amount.  However, see the timeline below for the reason I thought I had won the dispute (and had, in fact, requested a refund check, which Discover sent):

 

I called to file the dispute on December 30, 2006.

 

There were two credits, one for $995 and one for $2,500, on my Discover cared, both dated 12/31/06.

 

On 1/22/07, two adjustments were posted to my account:  a negative $2,500 labeled “An adjustment to your account”, and a positive $2,500, labeled “OIA/Success Magazine Reversal of Temporary Credit.  With the original credit, this had the effect of permanently leaving the $2,500 refunded to me.

 

On 1/25/07, three adjustments were posted to my account:  a negative $995 labeled “An adjustment to your account,” a positive $995 labeled “Success Magazine Inves 813-8847200 F Repost of Disputed Transaction,” and a positive $995 labeled “Success Magazine Invester (sic) Education, LL Reversal of Temporary Credit.”  This transaction had the effect of reposting the disputed amount.

 

I received the statement that closed on 2/9/07 showing these transactions, and was confused.  I wanted to continue disputing the $995, and thought I legally had 10 days to do so, based on information I had found on the Internet.  I called an attorney using my PrePaid Legal benefits.  After making me tell the whole story for 45 minutes, he said he did not know if I had 10 days to dispute it, but I should immediately send a letter asking the status of all disputes I had filed with Discover in the last year, and appeal the decision on the $2,500.

 

On 2/21/07, I sent a letter to Discover via Priority Mail appealing the $995 and asking the status of all disputes filed with them for the last six months.

 

Thinking the $2,500 was permanent, I requested a refund of the credit balance, which was issued from Discover on 2/26/07, and received by me and deposited on 3/4/07.  My plan was to use the refund to pay off the home equity line of credit, which I had originally used to pay off Discover, so I didn’t have to pay 18+% interest.

 

On 3/5/07, I received a packet of information from Discover, dated 3/1/07, showing the documentation on the merchant’s response to the disputes, saying that they appeared to be correct.

 

On 3/9/07, I received another letter from Discover, also dated 3/1/07, stating that they had applied a temporary credit to my account for the $995.00 disputed charge; they are currently negotiating with the merchant to obtain a permanent credit; usually their negotiation is successful, in which case the temporary credit applied to my account will become a permanent credit.  In some cases, they obtain additional information regarding the charge, which prevents them from issuing a permanent credit; if that happens, they will notify me and ask that I resolve the matter directly with the merchant

 

The 3/9/07 statement showed another entry to the account, dated 2/28/07, for a positive $2,500, for “Online Invstr Advantag Draper UT Reports of Disputed Transaction.”

 

On 3/11/07, I sent another letter to Discover rebutting the information that the merchant had sent relating to the $995 dispute.

 

On 3/26/07, I received a letter dated 3/20/07 from Discover stating they will not reopen dispute, without referring to which dispute, the $995 or $2,500; and that they have “adjusted the account so that it reports as disputed to the credit bureau reporting agencies.”  In checking my credit reports, there is indeed a comment on the Discover accounts that I am disputing the account.

 

I’ve already talked to an attorney, who said there’s no way you can take this to small claims court, because it is too complicated (another $2,500 was also paid on another credit card as part of the same transaction).  She may do it for me for a retainer of $1,000, at $100 per hour, half her normal rate, for a consumer fraud case, or 45% on contingency, but she is still looking at it.  So all a company hase to do is make the situation so complicated that you have no recourse without spending a LOT more money, and they’ve got your life savings!  So they can actually rip you off for between $6,000 and $25,000, and they will most likely be able to keep it, because it will cost you too much and be too uncertain to try to get it back!  What a deal!

 

By the way, I just paid Discover online.  I have stopped using the card and will have one more payment to make to them next month, for under $100.  Reposting the $2,500 got me 19 cents above a $20 level for the Cash Back rewards, so I’ve applied for and gotten that also, and I will be kissing them goodbye after 15 years of being a loyal customer – all because they can’t process a dispute reliably.  If they hadn’t left the $2,500 on the account, but just denied it, I wouldn’t have been upset with them, but the total experience with them has been totally unacceptable.  And Discover was the one and only card I used prior to this - unless the merchant didn't take Discover!

 

Also, just in case anyone else is looking at this, the merchant that I disputed the charge for was “Success Magazine Investor Education,” also known as “INVESTools,” sold through “Get Motivated! Business Seminars” (the one that said I didn’t contact them for a refund, although I had contacted the others, which are one and the same, multiple times, and I thought I bought everything from Success Magazine Investor Education!), and Online Investor Advantage, and probably a multitude of other names..  Just keep my experience in mind if you’re considering buying their education – they are great “motivators” to buy their education, but in my opinion the education is no more than you can get by reading the Dummies book “Technical Analysis for Dummies” by Barbara Rockefeller, which lists for $24.95, and sells on the online booksellers for less than $17.  As for using the web site tools, their own 12/31/06 10-K filed with the SEC says they have 278,000 graduates, but only 85,400 continuing subscribers to the web site – when they REQUIRE you to buy at least the $995 education to even access the web site.  That means at least 70% of the people who originally paid at least $995 to access the web site didn’t think it was worth continuing (including me) – and they say they have 56% more Investools graduates of the initial education courses in 2006 than in 2005, so how many of the 85,400 are just people who haven’t finished their 6 months to 2 year “education,” decided it wasn’t worth it, and dropped the web site yet?

 

Thanks to everybody for the advice - I wish I could have kept up with disputing them, but I just couldn't look forward to years of being hounded by collectors, etc.  I ALMOST could have kissed off the FICO score, because I don't rely on credit, but I may have to refinance the home equity line of credit in two or three years, and it looks like the problem might still be with me then.

 

I will instead take my experience to the public forum, exercising my first amendment right of free speech to inform others of my VERY unhappy experiences with INVESTools, Success Magazine Investor Education, Get Motivated! Business Seminars, and Discover!


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